Japan to compensate nuclear victims

Relief at nuclear operator TEPCO as cabinet approves bill to compensate thousands of people effected by Fukushima plant.

14 Jun 2011 04:24 GMT

Japan's cabinet has approved a bill to help embattled Tokyo Electric Power Company (TEPCO) compensate tens of thousands of people affected by the crisis at its Fukushima Daiichi nuclear plant, sending its shares soaring in Tokyo trading.

The bill, which is yet to be approved by parliament, will see the creation of a body to handle claims made against TEPCO and will be funded by public money as well as contributions from power companies.

Shares in the utility soared 18.59 per cent after the bill was approved.

The government-devised aid plan for TEPCO will include the purchase of its corporate bonds, stocks and assets to support the company's operations, but analysts warned that uncertainty still surrounded the bill.

"Investors are buying back TEPCO shares believing that the government will pay a decent price for shares, but nothing concrete is known yet and it's too soon to make that assumption," Akino told Dow Jones Newswires.

Under the plan, TEPCO would be required to eventually pay back all funds it received from the organisation.

The bill's passage through parliament is expected to meet resistance over the idea of public support for the firm at the centre of the world's worst nuclear crisis since Chernobyl 25 years ago.

"We will aim to get the bill through parliament as early as possible," Banri Kaieda, minister of economy trade and industry, said.

Record loss

The Mainichi newspaper reported on Tuesday that the government would allow the utility to raise its electricity prices by 16 per cent to help finance increased fossil fuel costs as the company relies more on thermal power generation.

In May, TEPCO posted a record annual net $15bn loss, the biggest ever for a non-financial Japanese firm and its then-president resigned to take responsibility for the crisis.

The company has come under fire for its response after a 9.0 magnitude earthquake triggered a tsunami on 11 March that crippled cooling systems at the Fukushima plant, leading to reactor meltdowns and forcing evacuations in a 20km radius.

Asia's biggest power company, TEPCO supplies electricity for the megacity of Tokyo and the wider Kanto region, an area that contributes more than a third of the nation's gross domestic product.

TEPCO has said it would cut jobs and draft a streamlining plan this year as it looks to raise funds to pay a compensation bill that some analysts have estimated could reach as high as $120bn.